Where Washington Governs Better than Montgomery — for now

I’ve maintained that there are (at least) a couple of things that the DC government does better than Montgomery County government: charter schools and taxi regulation.

It would seem that Washington is upset about this, and has been moving to make taxi service worse than it has been. (I still think it would take a while to descend to MoCo’s level, though).

The main difference has been Washington’s unwillingness to impose anything but minimal restrictions on entry to the market. Anyone passing some very simple safety and competence standards can operate a taxi service in the District. The healthy competition means that it’s easy to get a cab downtown. It also means that a relatively small investment allows people to work for a living; the more you work, the more you can make. In MoCo, it can be very difficult to find a cab, since regulators kowtow to the cab firms, and restrict new competition. (Basic economics: restrict supply and restrict price, and the market never clears. Consumers are left demanding more taxi service than the government will allow.)

Last year, the City Council was considering shifting to a medallion system like New York’s, which would sharply restrict the availability of taxis. Fortunately, they heeded a study which demonstrated the likely results: Longer waits for service, higher fares, increased corruption – and a windfall for those firms already in the business. Like much economic regulation, taxi regulation is designed to benefit those who are already in the business, and protect them from competition.

One thing regulators can’t stand is someone rising up and succeeding, despite them. Sedan service Uber has been bringing in a lot of customers, and the taxi owners are complaining. The DC Taxi commission is proposing a new set of regulations to drown the successful service. The regulations would limit the participation of small business or individual owners (seriously – only fleets larger than 20 cars would be allowed to engage in the business). It would also prohibit pickup or dropoff outside of DC (so there goes the idea of picking up the sedan in Takoma Park or Bethesda to ride downtown).